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The Small Investments That Protect Your Big Investments (Every Little One Helps!)

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Estimates suggest that people with net worths over $25 million spend around $1 million per year protecting their nest eggs. They do all sorts of things, such as make small investments, to ensure that they can keep their money into the future and that no one else will get their grubby little mitts on it.

From a personal security perspective, you can understand this. Being ultra-wealthy evokes jealousy in other people, and makes you the target of crime.

Knowing how to protect your money, though, is not always easy. Sure, you should be doing some obvious things. However, there are also some not-so-obvious things, too. For many, it is a difficult balancing act. On the one hand, you are trying to prevent your money from getting into the wrong hands. On the other hand, you want to enjoy your life without worrying about people taking your assets all the time.

In this post, we look at some of the small investments that will take care of your big investments. These are minor items you should spend money on to protect your finances for years to come. As you read below, you will notice that some of these small investments are not necessarily financial. However, they still take up your resources in some way, whether that is your time, emotions, or relationships.

Keep It to Yourself

Unless you are a celebrity and in the public eye, you should work to keep the true value of your assets private. Do not post your net worth on Wikipedia or Facebook. Avoid contact with media outlets trying to publish you on rich lists. Do not talk about the houses, cars, and investments you own at dinner parties.

Instead, enjoy regular company and keep your bank balance to yourself. Even if you have tens of millions wrapped up in stocks and shares, avoid the urge to speak about it. Operate discreetly so that you can enjoy your money without having to live with some of the social costs that often accompany having a lot of wealth.

Insure Against Loss

Photo by Juan Marin on Unsplash

When you have a lot of wealth, insurance becomes significantly more important. Losses can reach tens of millions from a single event, depending on how diversified you are.

That is why you should insure against loss as much as you can. Look for insurers who will cover you in the event of a disaster and prevent you from losing your investment.

Today, getting insurance is relatively easy on property. Most insurers will reimburse property owners for damage or destruction of their dwellings via their homeowner’s insurance.

You will also want to protect against the loss of your vehicles and even key people at the companies you own. These forms of insurance help to diversify your coverage, protecting against “black swan” events while keeping the costs of holding wealth to a minimum.

Train People in Your Businesses in Cybersecurity

Cybersecurity issues are bringing more small businesses to their knees every year. Companies simply do not understand how to defend themselves against the threats that are out there, with many being extremely vulnerable indeed.

For SaaS companies, the issue is not usually the network. Cloud providers provide ample protection and breaches are rare. (In addition, even if they occur, they are the vendor’s problem, not yours).

However, the human element is usually what precipitates a crisis. Workers in your firms can make mistakes that provide hackers with the information they need to compromise your systems.

That is why more leaders now invest in cyber security awareness training. This teaches employees about the risks of phishing and other trust-based techniques designed to compromise systems. It tells them, for instance, not to respond to emails asking for password information or to download links from emails from unknown sources. It asks them to check the email addresses of all messages they receive carefully to make sure that they are exactly the same as the official email addresses of the real senders. Small differences can be hard to detect.

Vet Your Inner Circle

Wealthy people have an inner circle of people they rely on to manage aspects of their finances for them. In the case of the ultra-wealthy, this might be a family office. For those in lower wealth tiers, it could be accountants, brokers, insurance partners, and wealth managers.

You will want to vet your inner circle fully and make sure that you build real trust with them. Ideally, you should retain personal direct control over your finances at all times, with other people providing ancillary services. Make sure that you work with independent lawyers and auditors, and get one member of your team to monitor the work of another. This way, everyone can watch everyone else, reducing the risk of foul play.

Choose a Quality Broker

While there are budget-friendly investment brokers out there, the quality of their services is mixed. Security and support may be lacking, which is okay if you are trading a few thousand in cryptocurrencies. However, it is not okay if you are dealing with hundreds of thousands, or millions of dollars.

Quality platforms tend to charge high fees. That is because they know that customers want maximum support when their wealth goes above a certain level. A $50 quarterly premium is nothing for somebody looking to protect a $5 million portfolio.

Choose a full-service broker. This way you can get access to trading tools, advice, 24/7 phone support, educational materials, and so on.

Learn Fundamental Investment Principles

Learning investment principles is an investment in itself. The people who do it find that they are soon able to develop long-term plans that build their wealth indefinitely into the future.

Investment principles, though, are not always straightforward. In fact, they can be quite technical and difficult to grasp, even on an intuitive level. Furthermore, many finance experts and money managers do not understand them. Their insights remain quite basic compared to the kind of deep knowledge needed when managing a large sum of money.

For this reason, you will need to go out and educate yourself, or learn from the best. Read books, go to courses, and diversify your own knowledge of the investment landscape. Find out what works long-term, and learn how to leverage that information to succeed.

Remember, building wealth is an ultra-long game. For most people, it requires decades. It will not happen overnight.

Keep Your Valuable Documents Safe

For many wealthy people, documents — not bars of gold — are their biggest assets. Therefore, it pays to keep things, such as title deeds and stock certificates, safe and locked away. If you can, share the responsibility between yourself and the professional service providers you work with. For instance, get your lawyer to keep a copy of all your titles, just in case you lose yours.

Learn the Tax Code

Learning the tax code is just as important as understanding investment principles. Taxes have tremendous impacts on wealth over the long-term. Once you understand how they work, you are in a much better position to maximise your wealth and leverage your earnings.

Start simple. Explore your investment account options, and look for ways to reduce your taxable income. Consider placing money in a tax-free account if possible. Seek out options that help you keep as much of your capital invested as you can so that you can benefit from the long-term rise in market rates.

Learn How to Move Your Money Quickly

Lastly, you will want to learn how to move your money quickly in response to global events. You should be able to get out of any investment in under a month, and preferably, on the same day that new information becomes available. Transferring between assets is one of the ways the elite remain wealthy.

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